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Volume 21 No. 22

Labor and Agents

The decade-long NFL collective-bargaining agreement has another three seasons left, but in addition to the long-standing elements the NFL Players Association wants to see changed — from increasing its revenue share to limiting commissioner discipline — the players are pushing for changes to their commercial relationship with the league.

 

If the players stop granting all or some of their commercial rights to the league, it could have significant implications for how corporations do business with America’s top sport. Now companies such as Pepsi, for example, can cut a sponsorship with the NFL, negotiate directly with teams and the league for group player rights, and know the union will not sign a competitor to a deal.

DeMaurice Smith, the NFLPA executive director, said the union may take some of its commercial rights back from the league.
Photo: getty images

“That commercial agreement is contingent on first and foremost that these rights belong to the players,” said DeMaurice Smith, the NFLPA executive director. “So, you enter into a commercial agreement when you decide that you want to take this right, this right, this right, give it to the league in exchange for money and you allow them to do a deal. … We might make decisions in the future that we want to pull back other categories and do them ourselves.”

The commercial agreement between the NFL and NFLPA is not in the CBA but negotiated as a side deal to the labor pact. Like the CBA, the commercial agreement is a decade long and expires at the same time in early 2021.

When the league signs a sponsorship or licensing arrangement, these companies are granted player group rights, defined as six or more players. The players get paid of course, but the companies need not go through the union. And the NFLPA cannot sign a competing deal: for example, Coca-Cola in the soft drink category.

War chest ready for battle?

If the NFL Players Association does go to “war” with the NFL in 2021, which is the term used by NFLPA Executive Director DeMaurice Smith at his annual Super Bowl news conference when asked about what will happen when the CBA expires in three seasons, it should have a sizable war chest.

 

The union reported a profit of $57.4 million for the year ending Feb. 28, 2017, according to the tax return the NFLPA filed with the IRS last month. This follows a profit (in tax return parlance it is called a surplus) of $30 million in the year earlier period.

 

Net assets, which are assets minus liabilities, rose to $355 million from $297 million in the most recent reporting period, according to the return. The biggest contributors to union revenue were player dues and royalties, as well as a $14 million investment gain (in the year earlier period the NFLPA lost $9.6 million on investments).

 

Among expenses, the highest-paid contractor was Hillard Heintze for background investigation services at $979,059. It is a rare instance when the NFLPA’s top paid contractor is not a law firm — though not by much. The NFLPA paid Winston & Strawn $961,740 (down from $5.7 million the year before); and Gibson & Dunn $752,903.

— Daniel Kaplan

In return the league pays the union. In the 12-month period ending Feb. 28, 2017, the NFL paid the union $61.5 million, 37 percent of the labor group’s commercial revenue, according to the NFLPA’s annual report filed with the Department of Labor last spring. It is easily the biggest revenue source for the union.

“There is value in having one-stop shopping where the NFL can sell group player rights,” said John Tatum, CEO of sports marketing firm Genesco Sports Enterprises. “It clearly will impact how much money sponsors will invest if they secure the rights from the NFL and have to make an additional payment to the union.

“It will decrease league value if a competitor can simply buy rights through the union,” Tatum added.

The NFL declined to comment.

Smith took issue with the suggestion the NFL pays the union handsomely for the rights, stating the rights belong to the players to begin with.

“It is intellectually dishonest to start off with the fact we get a big check,” he said. “The only reason that check is what it is, is it is rooted in the group licensing rights that we have.”

The NBA Players Association last year took their commercial rights back from the NBA, which had been paying the union about $68 million annually. The NBPA set up a business unit to handle the rights.

The NFLPA already has a for-profit business unit, NFL Players Inc., that handles marketing and licensing and has branched into media and startup funding. So, the NFL union presumably is ready to hit the ground running if tasked with more commercial inventory.

“I look at the NFL as a vendor, right, they don’t have the exclusive right to anything when it comes to our group licensing rights,” Smith said. “We make the decision about what categories of things we are going to give to them.”

At least the NFLPA can decide starting in 2021.

People had counted Nick Foles out so many times, the Philadelphia Eagles quarterback had instructed his agents at Athletes First not to make any marketing or media deals prior to the Super Bowl.

Jimmy Fallon had called. “The Today Show” had called. Disney had called. They all wanted to get deals in place before the game just in case the Eagles won.

But Foles didn’t want to talk about any of that and instructed his agents, Justin Schulman, who has represented him since he was drafted in the third round by the Eagles in 2012, and Austin Lyman, his marketing agent, to say no to everything.

“Nick said he just wanted to focus on the game,” Schulman said last week.

Then, in the fourth quarter of the Super Bowl when it looked like the Eagles would win and Foles — the backup quarterback who everybody counted out — might be named MVP, Disney called Schulman, who was sitting in the stands of U.S. Bank Stadium.

“So literally in the fourth quarter, I am on the phone with Disney trying to figure out if he will do it and I said, ‘I need to find him after the game,’” Schulman said.

After the Eagles won, Schulman rushed the field to find his client. “We saw each other and gave each other a hug and he looked at me and he’s like, ‘What just happened?’” Schulman said. “I said, ‘Do you want to go to Disney World?’”

Agent Justin Schulman has been with Nick Foles from the draft, through injuries, benchings and trades.
Photo: michele whites

Foles did go to Disney World, but it was a long journey for a guy many saw as an unlikely star of the Super Bowl.

Foles had been traded. He’d been injured. He’d been benched. And he was a perennial backup — to Michael Vick on the Eagles, Case Keenum on the Rams, Alex Smith on the Chiefs and Carson Wentz on the Eagles, again.

In June 2016, Foles told Schulman he was done with football. Schulman counseled him against it. “I told him, ‘Go out on your terms.’”

Despite his efforts, Schulman was so sure that Foles had ended his football career that he made a bet on it with Lyman, even though he kept trying to get Foles to change his mind. And that summer of 2016, when training camp started, Foles was without a deal and Schulman went on vacation with his family.

“You want to know the life of an agent?” Schulman said. “When he called me back and told me he had changed his mind, I was on my family vacation in Atlantis in the Bahamas. And I spent the next three days working on a deal with the Chiefs from the floor of my hotel bathroom at night — and during the day as well — on my vacation in August.”

That was a two-year deal, but in the summer of 2017 the Chiefs declined to pick up Foles’ option for the second year, making him a free agent. Schulman did another two-year deal, this time for $11 million with the Eagles, in the summer of 2017. It was a record deal then for a backup, but it’s certainly below market value for a Super Bowl MVP.

Schulman talked to SportsBusiness Journal the day after the Super Bowl, working on just one hour of sleep. Asked what will happen now with Foles’ final year of his Eagles deal at $5.5 million, Schulman replied that everyone wants to know that. “If there is something to be figured out, it will be figured out,” he said, “but right now, 24 hours after the Super Bowl, we are kind of still in shock.”

Schulman has been with Athletes First since 2002 and got certified by the NFL Players Association in 2004. He recruits and represents a few players each year. For this year’s NFL draft, Schulman is representing Oklahoma tight end Mark Andrews and BYU linebacker Fred Warner. He also is co-representing Oklahoma offensive tackle Orlando Brown with Joe Panos and Texas punter Michael Dickson with Andrew Kessler.

Athletes First has signed a number of good players for the draft, headed up by UCLA quarterback Josh Rosen and Florida State safety Derwin James. The agency also has signed University of Texas at El Paso guard Will Hernandez, Arkansas center Frank Ragnow, Boise State wide receiver Cedrick Wilson and Washington State offensive lineman Cody O’Connell.

Agents Ryan Williams, David Mulugheta, Blaine Roche, Brian Murphy, Carmen Wallace, Kessler and Panos are representing the players. 

Liz Mullen can be reached at lmullen@sportsbusinessjournal.com. Follow her on Twitter @SBJLizMullen.

Mike George, an NBA agent who had been working at Excel Sports Management for the last five years, has opened his own agency in Canada and will co-represent several NBA players with his former employer.

 

George’s new agency is called One Legacy Sports Management and is based in Toronto. Together with Excel, One Legacy will co-represent Magic center Khem Birch, Grizzlies forward Dillon Brooks, Nets forward Rondae Hollis-Jefferson, Nuggets guard Jamal Murray, Bucks center-forward Thon Maker, Mavericks forward-center Dwight Powell and Nets guard Rashad Vaughn.

  

Birch, Brooks, Murray and Powell are Canadian. George is Canadian and was a teacher, coach and co-founder of CIA Bounce, a Canadian AAU basketball program that has produced NBA players, including Timberwolves forward Andrew Wiggins. He became an agent in 2013 when he joined Excel.

 

Photo: courtesy of One Legacy Sports Management

“It’s just something I wanted to do, especially in Canada,” George said of starting his own agency. “There’s never been a major sports basketball agency in Canada, so it’s the first one.”

 

Both George and Jeff Schwartz, Excel founder and president, who’s also an NBA agent, said George’s departure from Excel was amicable.

 

“We’re glad Mike was part of the Excel family; he really knows the Canadian basketball landscape,” Schwartz said. “We wish him the best as he branches out on his own and will continue to work together to deliver the level of service our shared clients have come to expect.”

 

George said although One Legacy and Excel will co-represent seven players, going forward he expects each agency will represent new clients separately.